Back in 2004, when construction began on the Burj Khalifa, the ambition was to draw the world’s eyes to Dubai. Now, thanks to forward thinking policies and vision, Dubai and the region more broadly have positioned themselves as one of the most important hubs globally as they pivot from solely oil-based economies to become more balanced, diversified and sustainable.
The MENA region is one of the most vulnerable to the negative impacts of climate change. Already an arid region, the situation could quickly turn perilous as rainfall levels drop and population numbers grow. Most of the region’s capital cities are forecast to face at least four months of intense heat annually. During 2022, the region suffered a series of dust and sand storms, blamed on the increasingly arid conditions. These caused infrastructure damage, affected transport, destroyed crops and increased health problems.
In the last 30 years, energy consumption per person and carbon emission output in MENA have doubled. And while these countries have the potential to use renewable energy, it currently makes up only 1% of use. Right now, up to 80% of electricity generated is for buildings, with a large proportion used to power air conditioning systems.
At the same time, the region is characterized by rapid urbanization and increasing population size. It’s projected that the Middle East and North African urban population will double from 2012 to 2050, from nearly 200 million to 400 million people. These are people that will need homes, facilities, and an efficient built environment.
That means it’s vital for the region to design and construct new buildings and infrastructure that are easier to cool, better equipped for rising temperatures, and more energy efficient overall.
Across the world, the building sector is responsible for about 40% of the global greenhouse gas emissions, by far the single most polluting industry globally. But whilst the West has millions of existing buildings in need of retrofitting (80% of the buildings that will be here in 2050 are already built), the MENA has an opportunity to embrace technology to create, design and develop purpose built green cities from the ground up. By leveraging best in class technology, systems and innovation the region can re-imagine the leading cities of the future (in the GCC 80% of the 2050 buildings are yet to be built!) and create a blueprint for the rest of the world. A literal ClimateTech and PropTech sandbox to help create the next generation civilisation.
This is a generational opportunity that is so unique to the region, given the legacy built world infrastructure of most developed economies in Europe and the US. When I spoke about the sustainable built world and urbanisation at Abu Dhabi sustainability week in January of this year, I was amazed to see how the region’s leadership are now fully embracing this generational opportunity to become a centre of technological innovation for sustainable buildings and urban living.
The opportunity to create a regional identity building new, energy-optimal spaces is too good to pass up – both for native entrepreneurs and those coming from the US and Europe.
As a home to a young, digitally active and globally-conscious population, the region is also eager for change. This is well evidenced in the rapidly growing innovation and startup ecosystem, alongside the region’s strong access to capital and enticing market for development.
For US and European-based companies, the likes of which we have in our portfolio at A/O Proptech, the MENA region can be a tremendously fertile ground for scaling and learning. It benefits from impressive testing facilities, financial support for innovation, and an innovation ecosystem that is growing by the day.
Whilst MENA needs climate-friendly solutions today to build for its population of tomorrow, the region also can serve as a great testing ground globally. Founders from overseas – who are sometimes battling against the economic backslide and investment slowdown felt in both Europe and North America – can come here and feel the optimism. Having spent a lot of time here in recent months, I certainly feel it. And this isn’t the only opportunity.The MENA region should aspire to become a renewable superpower. It’s a region graced with a geology well suited to carbon capture and storage, and with the underlying infrastructure to become a global leader in green hydrogen production.
Building new cities from scratch – something countries in MENA will need to do to keep up with population growth – has the power to shape the planning and construction industries right across the world. We have already seen the UAE and Oman commit to Net Zero targets for 2050, while Saudi Arabia and Kuwait have similarly adopted frameworks for 2060. However, more can, should and will be done as the region gains momentum in technology adoption and ecosystem development.
Just last year, Kuwait announced plans to establish a completely carbon-free green city XZERO, Saudi Arabia’s NEOM has committed to planting 100 million trees, and, in Abu Dhabi, Masdar City plans to be powered solely by solar and wind.
European and US founders should come and observe the massive appetite for green energy and sustainable development in this region and be inspired. The opportunity for a fruitful exchange of ideas, intellectual property and capital is too big to be missed.
As the largest built world technology VC firm in Europe, and a global leader in sustainability, at A/O Proptech we plan to play a key role in the region. Those Western startups that work in cooperation with MENA could scale faster and solve the world’s most challenging climate problems more effectively.
In no time at all, the worlds’ eyes will be on MENA not for their most stunning architecture – of which there will be no shortage – but because of its forward thinking vision and execution as this region builds the smartest, most sustainable and efficient cities on the planet. That’s a goal worth working towards and one which we can all contribute to.
